European Stocks Fall as Virus Woes Rein in Vaccine-Fueled Gains
(Bloomberg) -- European equities fell from an almost nine-month high as investors weighed rising coronavirus cases and the extent of recent gains fueled by optimism about vaccine progress.
The Stoxx Europe 600 Index closed down 0.8%, with miners and travel and leisure shares leading a broad retreat in industry groups.
European stocks have surged 13% in November on positive vaccine updates and reduced political uncertainty after the U.S. election. With the gains exceeding strategists’ previously held expectations for 2020, prognosticators are turning to the outlook for next year. The average of nine forecasts is for the Stoxx 600 to finish 2021 about 2% higher than Wednesday’s close.
Rising Covid-19 cases put Tokyo on the highest virus alert level, while U.S. deaths from the infection crossed 250,000 and Italy saw the biggest daily increase in deaths in seven months. The grim figures are damping vaccine-related market euphoria.
“With infection and hospitalization rates rising, and the risk that current lockdown restrictions either remain in place, or get extended into 2021, the probability that any economic damage will become permanent is only likely to increase,” said Michael Hewson, chief market analyst at CMC Markets. “These risks then need to be offset by the longer-term benefits of a workable vaccine, which even if starting to get rolled out next year, could take up to two years to really make a difference.”
Among notable single-stock movers, Thyssenkrupp AG slid after skipping a dividend and forecasting a full-year loss. Royal Mail Plc gained after saying a turnaround at its main U.K. business is picking up pace as the pandemic spurred a boom in parcel traffic. Norsk Hydro ASA advanced after Pareto raised the stock to buy.
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